Friday, September 27, 2013

Miltiple Choice Form Contract Does Not Preclude Arbitration

The court of appeal holds that an arbitration agreement's inclusions of multiple options for selecting an arbitrator did not make the argument too uncertain to enforce.Some home remodelers sued their clients for failure to pay progress payments on a construction job. The parties’ contract appears to have been a form that anticipated that the parties would pick one of three different options for choosing an arbitrator to be conducted under the United States Arbitration and Mediation Rules of Arbitration and strike the others. But the parties never selected an option, so all three possibilities remained, bracketed, in their signed agreement. After demanding in a letter that plaintiffs arbitrate, defendants petitioned to compel arbitration. The trial court denied the petition, finding that leaving the options in the contract precluded a finding of a mutual agreement to arbitrate.

The court of appeal reversed. Because Code of Civil Procedure § 1281.6 expressly permits the court to appoint an arbitrator when the parties’ agreement fails to do so, the presence of alternative options did not preclude a finding that that parties had entered an otherwise enforceable contract to arbitrate. Although the parties may not have agreed on an arbitrator, a plain reading of the Arbitration Clause clearly evidenced the parties’ intention to submit their disputes to arbitration. Further, the letter demanding arbitration was sufficient to satisfy the pre-petition demand requirement of § 1281.2.